Financial Accounting Problem
T-accounts / Statement of earnings / Ratio
Joanne Beauport, a connoisseur of fine chocolate, opened Joanne's Chocolates Inc. in Newtown on March 1. 2017. The shop specializes in a selection of gourmet chocolates and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in March 2017, the first month of operations: a. Received contributions of $78,000 in total from four shareholders to form the corporation b. Paid store rent for three months at $2,500 per month (recorded as prepayment) c. Purchased supplies for $1,700 cash. d. Purchased chocolates on account for $11,400, due in 30 days e. Issued additional shares to new investors for $19,000 cash. f. Used the money from (e) to purchase a computer for $5,800 (for recordkeeping and inventory tracking) The rest was used to buy furniture and fixtures for the store. g. Placed a grand-opening advertisement in the local paper for $1,030 cash h. Sold chocolates for $6,000, $4,650 was in cash and the rest on account. The cost of the chocolates sold was $3,900. i Made a $2,800 payment on accounts payable. j. Incurred and paid employee wages of $4,320. k Collected accounts receivable of $380 from customers. 1 Made a repair on one of the display cases for $358 cash. m. Made cash sales of $10,900 during the rest of the month. The cost of the chocolates and ice cream sold was $3,800 Required: 1. & 2. Post the above transactions in to the appropriate T-accounts. Cash Accounts Receivable Beg. bal. Beg. bal. End. bal. End. bal. Supplies Merchandise Inventory Beg bal. Beg, bal End. bal. End. bal. End. bal. Prepaid Rent Equipment Beg. bal. Beg. bal. End. bal. End. bal. Furniture and Fixtures Accounts Payable Beg. bal. Beg bal. End. bal. End. bal. Contributed Capital Sales Revenue Beg bal. Beg bal. End. bal. End. bal. Cost of Sales Advertising Expense Beg. bal. Beg bal. End. bal. End. bal. Wanes Fyens Wages Expense Repair Expense Beg. bal Beg. bal. End. bal. End. bal. 3. Prepare a statement of earnings for March 2017 JOANNE'S CHOCOLATES INC. Statement of Earnings (unadjusted) For the Month Ended March 31, 2017 Operating expenses Total expenses n 4. Not available in connect 5. After three years in business, you are being evaluated for a salary increase. One measure is how efficiently you managed the assets of the business. The following data are available: Total assets Total liabilities Total shareholders' equity Total Sales Net earnings 2019 $139,000 72,000 67,000 137,000 51,400 2018 $ 81,000 37,000 44,000 123,000 35,600 2017 $67,000 30,000 37,000 88.000 7,400 *At the end of 2019, Joanne decided to open a second store, requiring loans and inventory purchases prior to the opening in early 2017 Compute the total asset turnover ratio and the return on assets for 2018 and 2019. (Round the final answers to 2 decimal places.) 2018 2019 Asset Turnover Return on Assets
